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Kansas’ Governor and G.O.P. Seek to End Income Tax

Gov. Sam Brownback, flanked by the House speaker, Ray Merrick, and the Senate president, Susan Wagle, at the State of the State address last week.Credit
Charlie Riedel/Associated Press

TOPEKA, Kan. — President Obama stood on the steps of the Capitol in Washington on Monday afternoon and laid out an expansive liberal agenda for the nation. Inside the Kansas State Capitol here this week, Gov. Sam Brownback and Republican legislators have been drafting what could be a blueprint for the other side.

On Wednesday, lawmakers received a bill to inch the state closer to eliminating income taxes, a centerpiece of a broad legislative vision that many in the Republican Party here hope will serve as a model of conservative governance for other states, if not the nation, to follow.

While Republican principles of small government and low taxes have holds on large swaths of the country, Kansas provides perhaps the starkest view of the crimson ideology that could challenge Mr. Obama’s Inauguration Day rallying cry.

This month, the largest tax cut in Kansas history took effect, and most of its Medicaid system was handed over to private insurers. The bill introduced this week would pare taxes further, with the goal of eventually eliminating the state’s individual income tax. Mr. Brownback has already slashed the state’s welfare roll and its work force. He has merged government agencies and is proposing further consolidation. He is pushing for pension changes, to change the way judges are selected and for altering education financing formulas.

“I think it is the leading edge of the conservative economic and political movement,” said State Representative Tom Sloan, a Republican representing the area around Lawrence. “As such, it is the example that other state leaders will look to to determine whether the political philosophy can mesh with the expectations of the public.”

In last year’s elections, the state bucked its long tradition of moderate Republicanism. Conservatives ousted several moderates in Senate primary contests and went on to victory in November. Now, for the first time in generations, the House, the Senate and the governor’s office in Kansas are controlled by conservative Republicans. In much of the rest of the country, the political equation is similar: The Republican Party now controls both legislative chambers and governorships in 24 states. Democrats have single-party control in 13.

Many here, including the governor, have characterized the state’s legislative endeavors as an experiment. Mr. Brownback, elected in 2010, and his supporters are betting that their agenda will show the rest of the country that conservatism provides a path to economic prosperity.

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Senator Susan Wagle at the Kansas State Capitol.Credit
Steve Hebert for The New York Times

“I think the unique thing is that we’re applying the principles on how you get your cost down and still provide a high-quality product,” Mr. Brownback said in an interview. “That’s been in the private sector, but it hasn’t been in the public sector for 50 years.”

Skeptics, meanwhile, contend that Mr. Brownback is leading Kansas toward economic devastation that will leave many of the state’s residents without basic services and its children without a proper education.

“It kind of eliminates a large group of Kansans out of that pursuit of happiness,” Senator Oletha Faust-Goudeau, a Wichita Democrat, said of the governor’s proposals. “They will still struggle. They’ll pay the highest taxes. They are already working jobs with no benefits or very little benefits.”

Representative Barbara Bollier, a Republican representing the suburbs of Kansas City, questioned why the state was cutting taxes at a time of sagging revenues. “It’s beyond extremely conservative because no one else is doing it,” she said.

Legislation passed last year that took effect this month consolidated three income tax brackets into two (4.9 percent and 3 percent). It also eliminated taxes on nonwage profits for certain types of businesses.

Supporters said these measures were necessary to reverse years of economic stagnation. Private-sector jobs have grown just 1.6 percent in the state over the past 14 years, compared with 12.2 percent in the 10 states with the lowest tax burdens, according to data compiled by the Kansas Policy Institute. The state estimates that the tax cuts will generate nearly 23,000 jobs by 2020 and $2 billion of income for the state.

“If you look at the demographics of my voter base, a lot moved to Florida and Nevada for lower taxes,” said Senator Susan Wagle, the Republican Senate president who represents Wichita. “I’d like to see them come back.”

Kansas’ tax policy has caught the attention of its neighbors. Gov. Dave Heineman of Nebraska, a Republican, has introduced a bill to eliminate a variety of taxes, including ones on individual income and small businesses. Gov. Mary Fallin of Oklahoma, also a Republican, plans to call for modest income tax cuts, and Missouri lawmakers have discussed reforming their tax code.

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A photo of Gov. Sam Brownback by a portrait of Dwight D. Eisenhower.Credit
Steve Hebert for The New York Times

But there is significant concern in Kansas over the cost of the tax cuts, which is expected to total nearly $850 million in the coming fiscal year. In the budget he presented last week, Mr. Brownback proposed to help cover the cost of those cuts by keeping in place a sales tax increase that was scheduled to expire this year and by eliminating the mortgage interest deduction. Both proposals have proven unpopular among conservatives and liberals alike.

“I think it’s going to be a hard sell,” said Representative Ray Merrick, the Republican speaker of the House, who supports the income tax cuts.

Critics say Mr. Brownback’s tax cut was passed on the backs of low-income Kansans. The bill included the repeal of tax credits for food, rental housing and child care that benefited low-income residents. Because of those repeals, the poorest 20 percent of Kansans will spend an additional 1.3 percent of their incomes, an average of $148 per year, on taxes, according to a report by the Institute on Taxation and Economic Policy. The top 1 percent, meanwhile, will see the share of their income that goes toward taxes drop by 2 percent, or $21,087 per year, the report said.

“This tax bill that passed is really what I call Robin Hood in reverse,” said Senator Anthony Hensley, the Democratic leader, who represents Topeka.

While Mr. Brownback has aspired to make Kansas a state without income tax, critics note that other such states have other streams to supplement their revenue — Texas, for instance, has oil, and Florida has tourism. And as he looks to reduce taxes, Mr. Brownback has not increased financing for education to the level that a state appellate court mandated this month. (The state is appealing that ruling.) Opponents fear deeper spending cuts.

Brownback supporters say more focus needs to be placed on efficient government spending, in education and other areas, rather than the amount that was being spent.

But Mr. Sloan said he felt that lawmakers were simply tailoring spending to fulfill the tax cuts, risking essential services without so much as discussing what the priorities should be.

“Bottom line is, if the governor’s right and I’m wrong, the state will prosper,” he said. “If I’m right and the governor’s wrong, then the state will suffer long term. I hope he is correct because that’s the path we’re on, but I have my doubts.”

A version of this article appears in print on January 24, 2013, on page A14 of the New York edition with the headline: Kansas’ Governor and G.O.P. Seek to Eliminate Income Tax. Order Reprints|Today's Paper|Subscribe